What To Make Of Today's Market Move

Tyler Durden's picture

A visual summary of today's action...

And a verbal one, courtesy of Peter Tchir from TF Market Advisors:

If not unprecedented moves we are certainly witnessing a rare day in the markets.  The entire energy complex is down 5-10%.  Metals and agriculture are down 2-5% except for silver, down a whopping 11%! The Eur has depreciated 2%.  So far stocks have been largely immune to the move and credit has completely ignored it.

Clearly a combination of crowded trades, margin increases, and surprisingly dovish comments from Trichet sparked this move.  It's clear that the moves down are triggering additional stops and that no one has been willing to step up and play for a big bounce.

Equities have remained fairly calm so far.  Certainly a decrease in commodity prices is helpful and would go a long way to ease one of the main concerns expressed by company after company.  The move in the dollar is a little more troubling as the weak dollar has clearly been a positive for the economy and profits.  But the reality is that the stock market is a little like dear in headlights right now.  Investors aren't used to seeing moves of 10% in a commodity as important as oil.  I think the initial reaction of doing nothing will give way to selling.  Investors taking losses in commodities will take profits in stocks or at least raise some cash to post additional margin on their remaining positions.  The economic data has been weak at best and deteriorating, eroding support for stocks.  None of the major problems in the world have been solved, they have been merely swept under the carpet or ignored, but are still there.  The sovereign debt crisis is not better, if anything it's becoming more clear that default is likely for at least Greece.  Japan is still in the early stages of dealing with the consequences of the earthquake, tsunami, and nuclear disaster.  MENA remains troublesome.  With all the excitement of taking out Osama, no one focused on the fact that the 'No Fly Zone' in Libya has expanded into bombing buildings where Quadaffi is living. 

If the selling starts, the reports show that margin debt and net leverage in the stock market are back to extremely high levels.  Any selling in stocks could trigger margin calls there too.  The housing market remains a mess and fraudclosure hasn't gone away, if anything, it seems a safe bet that DB and MortgageIT are not the only entities in the crosshairs of the government. 

Clearly something is going on in the markets that is not natural.  Liquidity is at a premium.  Stocks have watched it calmly so far, but I expect they will get dragged into this as well and we will see margin liquidations in stocks too.  All indications are that people are pretty fully invested.  As mentioned earlier this week, stocks had lots of excuses to rally early in the week, but couldn't.  The buy the dip mentality is still there, and that could rescue stocks, but since the sell off in other assets does not appear normal, I wouldn't rely on buy the dip to save stocks.

Credit is completely ambivalent right now.  That largely makes sense, but we all know that credit is always liquid until it isn't.  It may be time to start shorting some LQD and HYG.  The carry is low, the markets have been supported by a big influx of cash - HYG has the most shares outstanding ever, and LQD has seen a strong rebound in shares outstanding recently.  I don't think there is anything wrong with the fundamentals in credit.  Companies have generally cleaned up their balance sheet and earnings are fine, but if investors need to raise some cash this market is as likely to get sold as any, and the speed of the sell off could be surprising.  With high yield, only yielding 7.5% I'm assuming many hedge funds have had to use some leverage to get potential returns above 10%.  If any move down remains small, they will grow their positions, but at some point, they will have to cut positions to defend their returns.  Many are relucantly long at these levels, so their willingness to hold on is lower than usual as they are not in love with the market at these prices.

In summary I would be very careful here.  I would be short stocks, light if not short credit, and would be looking for opportunities to go long the energy sector in particular. It will be interesting to see how China reacts overnight and I expect tomorrow's NFP to be a big disappointment - though I'm looking forward to hearing some new creative excuses as to why it was weak.  

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Texas Gunslinger's picture

The Wall Street casino got as many people packed at the commodity table as possible, then turned off the lights, as always. 

Free drinks at the Dollar Table!

Ahmeexnal's picture

Jesus ass-reaming Christ!

dynomutt's picture

Jesus likes using his auger on sheep.

He gives them his awl.

goldfreak's picture

so now trolls posing as Christians too?

Hook Line and Sphincter's picture

Yes, but spastica was referring to Jesus Juan Carlos del Gato Morales who was heard coming from the fields saying, 'Pinche Gringo's, Mi pais acaba comprar 100 tons de oro de papel.'

Almost Solvent's picture

Like little Jose who loves going to US baseball games by climbing up & sitting on the fence.

Before every game the whole crowd stands up to ask "Jose can you see?"

Hook Line and Sphincter's picture

Jose can see that the US is about to become Mexico.

Oye! Ningun adonde correr ahora.

tmosley's picture

If this is indicative of their quality, I welcome them heartily.

Texas Gunslinger is the best troll I have ever seen.  By FAR.

Strike Back's picture

He's an agent or a paid shill posing as an innocent, racist neo-con.

Zero Govt's picture

perfect CV for a GOP Presidential candidate, when does Texas Gun' annouce he's running? 

DaveyJones's picture

an innocent racist necon :)  Is that like a peace keeping missle?

tmosley's picture

I love your correct use of the word innocent.

Hearing that word used properly is like poetry.

And I don't think he's being paid.  I think he did it for the lulz.

DosZap's picture

No,so far away from Christians just more lack of respect.

Glad their not slamming Mohammed..............that's totally not PC.

JW n FL's picture
Republican-controlled committee voted for a 18-month delay of regulations intended to reduce risk in OTC derivatives.
Things that go bump's picture

Jesus Christ on a crutch fucking a duck, get over yourself, man. 

Dr. Richard Head's picture

God damnit.  I am buying more silver.

Oh, eat-bite-fuck-suck-gobble-nibble-chew,
Moose-piss, cat-pud, orangutan-tit,
Sheep-pussy, camel-crack, pig and lion shit.


scratch_and_sniff's picture

Listen to this, the guy is walking up the middle of the road shouting "silver"!! Needless to say, hes crushed.



Sierra Hotel's picture

This is actually some very nice trolling. Well Done.

Things that go bump's picture

Doc, blasphemy, of the take the name of the lord in vain sort, perhaps offends Texas Gunslinger, though his seeming pious Christianity may be only part of the facade of a troll. Thanks for that little ditty.  I haven't heard anything quite that vulgar since I let a sailor debauch me in my youth.  I hope it offended Texas Gunslinger.  I'm going to wait until silver starts creeping up again before I add to my stash.  I bought most of mine in the $15 - $17 range so I am still happy with my profits.  

BlackholeDivestment's picture

...you do not think the Truth is a choice ...do you Bitchez?http://www.youtube.com/watch?v=DCpxSzacbyc&feature=related 


...after you all run out of piss and vinegar ...there's a black hole, Jocko. You plan on rising from that bottomless pit too huh? Still can't see the reflection in the mirror? Bau Hau Haaaaus http://www.youtube.com/watch?v=OKRJfIPiJGY You all are some funny pathetic Bitchez. Better snap out of that shit quick, as in now, this day.



whoopsing's picture

Valby!!!.....nice one dickhead ;)

aerojet's picture

"You said it man, nobody fucks with da Jesus!"

creighton_abrams's picture

I f*ck you in the ass next Wednesday instead.

Zero Govt's picture

'Poof' there goes random lustful spontaneous sex

Dr. Porkchop's picture

Sweet mother of fucking Christ! PMs are on sale! Back up the Goddamned truck!

FEDbuster's picture

Speaking of "the truck", I think I will wait until Monday to fill mine up.  Gas is currently $3.58/gal. at Sam's Club, should be around $3.35 next week.  Or priced in silver, 1 oz= 10.5 gallons up from 1 oz.= 13 gals. last week. 

My favorite is that a 1964 quarter will still buy you a gallon of gas or a hamburger, coke and fries.  If you had saved $2,000 in pre-64 quarters, you could still buy a nice, new car with them.

Don't let a couple of days of panic (and fiat manpulation) influence thousands of years of monetary truths.

FeralSerf's picture

Can I help it if my gardiner's mother named him Hey-soose?  I didn't realize he was your lord.   And what about that Greek dude, Zeus?  You know, the dude that that Jew carpenter was named after.  When help is needed we've been told the way to signal him is by calling:  "Hey Zeus!"  How do you call him?

It's amazing that there are still people in this day and age that have swallowed this superstitious nonsense hook, line, and sinker.  It's impossible to give any credence to anyone that subscribes to this bullshit.  Therefor you are not credible.

Dogs worship.  Men don't worship.

"I do not find in our particular superstition of Christianity one redeeming feature"
Thomas Jefferson

"The most preposterous notion that H. sapiens has ever dreamed up is that the Lord God of Creation, Shaper and Ruler of all the Universes, wants the saccharine adoration of His creatures, can be swayed by their prayers, and becomes petulant if He does not receive this flattery. Yet this absurd fantasy, without a shred of evidence to bolster it, pays all the expenses of the oldest, largest, and least productive industry in all history." -- Robert Heinlein

legal eagle's picture

It is not about you being right, or someone else being right, it is about you being a fucking prick and not being sensitive to other people's beliefs. 90 pecent of the world population worships, get over narracistic yourself! 

ibjamming's picture



Seriously...why?  Because someone told you to?


To believe SO passionately...with NO proof...other than a VERY old book.  Written when people didn't know what electricity was.  It's control buddy...nothing more!

knowless's picture

it's societal structure and programming, which is necessarry for survival when you don't have cheap electricity.

Almost Solvent's picture

After Peak Oil we'll be back to the pre-industrial revolution anyway

tmosley's picture

We had industry before we started using oil in any great quantity.  I'm not sure why you think we'll go back.  Or why you think people are too dumb to come up with alternatives.

ibjamming's picture

Oh, I know WHY we have it...don't get me wrong.  The "oafs" need controlling. 


What better way than with "ghost stories" that scare them straight...at least "somewhat". 


What kills me is how MANY swallow it...hook, line, and sinker.  They actually BELIEVE...with ALL their being  (making them DANGEROUS), that "God" is looking out for them.  The absolute creator of EVERYTHING...the "Universal CEO", loves them and wants them to be happy...later...IF they follow the "rules".  The rules being different in EVERY sect of EVERY denomination.  The "God" of the old testament is a psychotic, neurotic, bipolar, wacko.  Jesus is OK, they needed new "God" for new times I suppose.  But come on...NOBODY writes about him before Paul?  50 somewhat years later.  No official records.  He's Barrack Obama!  The man with no past.  Who erased it?  Someone wanting to "embellish" a bit?  Maybe create his own version of the "ideal" religion?  And what about the Gnostic, and all the rest of the early Christianities?  You think King James and the "great compromise" is the definitive word?


It's a con...man...get it?

Creed's picture

The "God" of the old testament is a psychotic, neurotic, bipolar, wacko.  Jesus is OK, they needed new "God" for new times I suppose.  But come on...NOBODY writes about him before Paul?  50 somewhat years later.  No official records.



you have absolutely no idea what you're talking about

spouting your feel good slogans  may make you feel smart but they have no bearing on reality, good luck with your chosen course

mtomato2's picture

Go Creed.

Secular Humanists aren't worth worrying about.  Besides, God doesn't believe in them.

gatorontheloose's picture

++ knowless


would you rather be factually correct or alive ?

DosZap's picture

No, it's because you have no vision, and you have not been called....................yet, maybe you will.

Better hope so.

Creed's picture

with NO proof...



you idiots have no idea what the fuck you are talking about

you idots all worship something- for most here it would be money

 one way or the other you all worship something- choose wisely

Fred Hayek's picture

I know some pretty seriously religious people and they laugh (and roll their eyes in contempt) at the insecurity of people who take serious offense at such things.

Anyone who does really needs to grow up.


GeorgeHayduke's picture

If only that 90% could just keep it to themselves and not have to convert the other 10% or those who's one and only Gawd is different than theirs. How nice things might be then.

David449420's picture

The Christian Bible.

Pretty lousy novel.

The Hero of the story doesn't even get born until 3/4 of the way through the story & then he's killed off before the end.

Definitely could have benefited if the author(s) had a better editor.

90%? I question that statistic.

DosZap's picture

Not a novel, 66 separate letters, and books.No Hero,and the killed off was HIS choice, and your freedom,if you ever get it.

But no offense taken, ignorance is curable.

Stupidity is forever.